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RIMM Halts Stock, Cuts Guidance, Cites Shortfall In Blackberry Sales, Hockeysticks Rest Of Year Estimates

Tyler Durden's picture




 

Not good for long-suffering RIMM shareholders:

RIM now expects fully diluted earnings per share
for Q1 to be in the range of $1.30-$1.37, lower than the range of
$1.47-$1.55 previously forecasted by RIM on March 24, 2011. This
shortfall is primarily due to shipment volumes of BlackBerry smartphones
that are now expected to be at the lower end of the range of 13.5-14.5
million forecasted in March and a shift in the expected mix of devices
shipped towards handsets with lower average selling prices
. Gross margin
for the first quarter is expected to be similar to the 41.5% previously
guided. This mix shift is also expected to result in revenue that is
slightly below the range of $5.2-5.6 billion guided on March 24.
Expected shipments of BlackBerry PlayBook in the quarter continue to be
in line with our previous expectations and we have not experienced any
significant supply disruptions in Q1 due to the impact of the Japan
earthquake.

RIM expects to achieve full year fully diluted
earnings per share of approximately $7.50, which reflects anticipated
strong revenue growth in the third and fourth quarters of the fiscal
year driven primarily by the launches of new BlackBerry smartphone
products and prudent cost management.

So plunging earnings in Q1, but hockeystick rest of year. Good luck with that.Also, barely dropping revenues and margins, yet a profound hit on EPS? So... S,G&A (i.e., labor costs) increasing? Can't be: repeat after us - there is no wage inflation, there is no wage inflation, etc.

 

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Thu, 04/28/2011 - 16:16 | 1217530 moldygoat
moldygoat's picture

Probably because ipads taste better!

Thu, 04/28/2011 - 16:21 | 1217538 Hugh G Rection
Hugh G Rection's picture

dunno, RIMM jobs are bullish in an inflationary environment, go long.

Thu, 04/28/2011 - 16:41 | 1217648 tallen
tallen's picture

Especially for RIMM shareholders, they're getting the rimming of a lifetime. Where's Robotrader?

 

Thu, 04/28/2011 - 16:17 | 1217532 mynhair
mynhair's picture

Isn't RIMM also planning a stock buyback?  Buggers.

Thu, 04/28/2011 - 16:22 | 1217535 firstdivision
firstdivision's picture

It's easy for them to hockeystick those Q3+ earnings

QE3 = a Blackberry in every pocket, and a Playbook in every hand (since the Playbook cannot do email unless you have a BB phone near it)

Thu, 04/28/2011 - 16:22 | 1217542 The Axe
The Axe's picture

Oh NO  my UGGS are making my feet sweat after-hours..And I believe I have brain cancer from my Blackberry...Plus my Microsoft desktop just got its 1 millionth virus.

Thu, 04/28/2011 - 16:21 | 1217544 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

These news stories, we've had 100s of them over the past year or so... but they never seem to add up to a substantial negative hill of beans do they?

Thu, 04/28/2011 - 16:23 | 1217569 The Axe
The Axe's picture

Market controlled by computers...computers don't give a rat's ass.. 

Thu, 04/28/2011 - 16:29 | 1217584 Goofy Bastard
Goofy Bastard's picture

Your implication that a company's earnings and the future prospects of earnings should have any part of a company's valuation confuses me.  Where did you come up that strange idea?

Thu, 04/28/2011 - 16:29 | 1217600 willien1derland
willien1derland's picture

What would Warren Buffet Do? (Get Sokol to buy the stock for him!)

Thu, 04/28/2011 - 16:22 | 1217546 trav7777
trav7777's picture

BBs suck...they have survived only this long bc of their legacy corporate EM function.  But their product portfolio is 2 generations behind the curve.

Thu, 04/28/2011 - 16:33 | 1217627 redpill
redpill's picture

Correct.  Anyone who has gotten a new HTC, Droid, or iPhone in the last two years could see this coming a mile away.  I would have shorted the piss out of them if I was that type of investor.

 

Thu, 04/28/2011 - 16:42 | 1217659 willien1derland
willien1derland's picture

Logic Test

1.) Blackberry Sucks (check)

2.) Obama uses a BlackBerry (check)

3.) Therefore, Obama Sucks (check)

Logic test completed successfully...

 

 

Thu, 04/28/2011 - 17:22 | 1217938 dukeland
dukeland's picture

I will take this one step further..

4.) O'bummer uses iPad2 (check) - Bunner was pictured carrying one on Airforce 1

5.) Ergo, Apple Sucks.

Now the test is complete..

 

Thu, 04/28/2011 - 16:19 | 1217547 tmosley
tmosley's picture

Oh shit, Spalding just offed himself.

Thu, 04/28/2011 - 16:26 | 1217570 tmosley
tmosley's picture

D'oh!


by Spalding_Smailes 
on Mon, 03/28/2011 - 09:53
#1108386

I tossed out 25% runners over the last 5 months.... You could have made money hand over fist trading.....

Exxon Mobil, US Steel, Rimm, Nividia, ect .... Make your 20% then take your profits .... Simple.

Thu, 04/28/2011 - 16:22 | 1217548 idea_hamster
idea_hamster's picture

Oh, man -- Reggie is going to be insufferable now!  ;-)

Thu, 04/28/2011 - 16:30 | 1217609 willien1derland
willien1derland's picture

+1,000 - Reggie is Da Bomb Diggity!

Thu, 04/28/2011 - 17:22 | 1217922 Illegitimi-Non-...
Illegitimi-Non-Carborundum's picture

All I had to do was read the headline and that was my first thought to...Reggie nailed it

Thu, 04/28/2011 - 16:35 | 1217620 I am a Man I am...
I am a Man I am Forty's picture

why? his google apple trade is not working

Thu, 04/28/2011 - 18:28 | 1218215 apartofthings
apartofthings's picture

True, AAPL seems to be grinding in a range, GOOG is off a bit for the month.

 

I've thought a lot about buying puts, but what stops me is inflation. As the Chairthing prints more money, the price of AAPL may rise, even though the value of it falls. But those calls would be losers anyway.

Thu, 04/28/2011 - 16:20 | 1217550 Henry Chinaski
Thu, 04/28/2011 - 16:33 | 1217622 mynhair
mynhair's picture

Nah, what they need to do is replace the tracball with a little glass bowl, and run a hole down the center of the body.  Make it a real Crackberry.

Thu, 04/28/2011 - 17:22 | 1217923 knukles
knukles's picture

Operator assistance between the cheeks!  
Nice.

Thu, 04/28/2011 - 16:26 | 1217551 hedgeless_horseman
hedgeless_horseman's picture

So plunging earnings in Q1, but hockeystick rest of year. Good luck with that.

The bad hockey sticks ______
                                                \

 

not the good hockey sticks ______/

Thu, 04/28/2011 - 16:32 | 1217614 willien1derland
willien1derland's picture

Bad Hockey Sticks BITCHEZ! (Damn, I have ALWAYS wanted to post a BITCHEZ comment!) Thanks HH

Thu, 04/28/2011 - 16:25 | 1217563 X. Kurt OSis
X. Kurt OSis's picture

This just in: McDonalds accepts 62,000 applicants, up from consensus expected of 50,000.  Bid to cover was exceptionally strong at 16.3, with over 1,000,000 submissions.

See?  The job market is improving.

http://noir.bloomberg.com/apps/news?pid=20601087&sid=aV2Tu2T3GcZs&pos=6

 

Thu, 04/28/2011 - 16:33 | 1217626 willien1derland
willien1derland's picture

Funny heard rumors McDonald's applied to Fed for Primary Dealer status - 1st one with a DRIVE THRU window!

Thu, 04/28/2011 - 16:39 | 1217658 X. Kurt OSis
X. Kurt OSis's picture

Make sense.  Hamburger-like meat is much more expensive than fiat paper.  

Step 1: Flip T-Notes to the Fed

Step 2: Process Fiat into greenish tinge Big Mac's, add some congressional pork for flavor.

Step 3: Profit.

 

Fri, 04/29/2011 - 03:22 | 1219435 StychoKiller
StychoKiller's picture

Kindly stop giving TPTB ideas (or, start charging them some Tozs!) :>D

Thu, 04/28/2011 - 16:22 | 1217564 Ruffcut
Ruffcut's picture

Got some puts on rimmy. My kid says they are losing market position rapidly.

Hockeystick, is appropriate for it is playoff season. GO WINGS!

Thu, 04/28/2011 - 16:22 | 1217565 monopoly
monopoly's picture

This one eventually just dies a slow death> Dead money long term.

Thu, 04/28/2011 - 16:25 | 1217567 vincentmulleman
vincentmulleman's picture

I guess the Blackberry trend amongst youngsters is only going on in Asian and European countries 

Thu, 04/28/2011 - 16:24 | 1217577 Cone of Uncertainty
Cone of Uncertainty's picture

This is just a rimm-job.

Thu, 04/28/2011 - 16:27 | 1217582 Ecoman11
Ecoman11's picture

Walmart back to firearms—now Michael Moore can make a sequal.

Thu, 04/28/2011 - 16:38 | 1217634 willien1derland
willien1derland's picture

Or depending on where he films he could be SHOT making the sequel - beware Mullets of da South...deadly aim & Mr. Moore is...a 'gifted' target

Thu, 04/28/2011 - 17:06 | 1217846 HelluvaEngineer
HelluvaEngineer's picture

That would be unsportsmanlike.

Fri, 04/29/2011 - 03:23 | 1219438 StychoKiller
StychoKiller's picture

Moore:  "Gimme three steps, gimme three steps mister, and you'll nevah see me no mo!"

Thu, 04/28/2011 - 16:28 | 1217595 wswarrior
wswarrior's picture

If the stock reacts anything like AMZN, it will close up 8% tomorrow on the stellar results. 

Thu, 04/28/2011 - 16:30 | 1217607 Misean
Misean's picture

Both have nasty server outages that leave customers pissed. I can't believe that isn't good for a 200 point pop alone.

Thu, 04/28/2011 - 16:35 | 1217610 carbonmutant
carbonmutant's picture

Down $47, Up to $52... in 3 min.

Thu, 04/28/2011 - 16:37 | 1217629 mynhair
mynhair's picture

That's just King LOLlar burping....

Thu, 04/28/2011 - 16:42 | 1217639 plocequ1
plocequ1's picture

My thoughts.... Lets see... Dipping Gross Margins..Amazon.... Up 10..  POMO...  BTFD. 

Thu, 04/28/2011 - 16:55 | 1217767 DavidPierre
DavidPierre's picture

 AMZN

Let's Talk About A REAL Bubble

I love this quote from the Amazon.com CEO in the Company's press release that accompanied the earnings report: "We love inventing on behalf of customers and have never been more excited about the long-term opportunities."

He's probably thinking to himself also: "We love inventing earnings reports on behalf of investors and have never been more excited about the opportunities for this enabled by GAAP and our Government."

It boggles my mind that the only investment "bubble" that the financial media sees right now is gold and silver. I'm bored of explaining to people why gold is not even remotely in a bubble.

So let's look at what a real investment bubble looks like.

AMZN's total market cap is $90.4 billion. Now, AMZN announced that its latest operating income was $322 million vs. $394 million in Q1 2010. That's an 18% decline. Based the latest trailing 12 month cash flow just over $3 billion, AMZN is trading at 30x cash flow. When a normal company trades at anything over 5x cash flow, you expect that to be because you expect a very high rate of cash flow growth. BUT, AMZN's operating income, the largest component of cash flow, dropped 18%. Think the market is being insane about the prospects for AMZN's growth?

AMZN also announced that the operating income for next quarter would be between $94 million and $245 million. This is an incredibly wide variance in guidance and it blows my mind that the market has tacked on over $3 billion in market cap to AMZN for a company that can't project its cash flow expectation for Q2, which already 33% over! This is insane.

Let's give Bezos the benefit of assuming Q2 operating income will come in at the midpoint of $170 million and annualized that number, which is generous considering that operating income is now declining at double digits. This yields a forward operating income projection of $680 million. The stock thus trades at 132x operating income!

THAT MY FRIENDS IS A BUBBLE.

Please note, we're not even talking about net income and p/e ratios here. Amazon's accounting is so obsfuscated by GAAP exploitation that I would more likely believe in the Easter bunny than I would Amazon's reported numbers.

So what's the deal? I used to track and untangle Amazon's accounting pretty closely up until about 8 years ago. I fatigued waiting for the SEC and NASD to crack down on AMZN'saccounting shenanigans. Of course the employees in those two organizations spend more time surfing porn than they do enforcing the law. The basic "crux" of Amazon's accounting exploitations has to do with how they account for fulfillment, marketing and shipping expenses. These are major major expenses for Amazon. Now, I don't have time to dissect its last 10K today, but I assume that they are still doing the same thing they were doing 8 years ago, especially since the source of their operating income cliff dive will be from these expenses.

In a nutshell, Amazon "buys" revenues by spending a massive amount on the process of getting you to buy from them. This includes subsidizing the price you pay by charging less than competitors and offering huge shipping deals, often extending free shipping. To be sure, they have negotiated favorable shipping deals with the big shippers. HOWEVER, they do not recognize the costs involved in all of this as they incur them, choosing instead to "capitalize" the majority of these costs. It's a "cost accounting" manipulation that is far too complicated for the regulators to understand. I don't have to go through the footnotes of their financials because all I had to do was read their press release to know they still do this.

Feel free to see what I mean HERE In the 7th paragraph they detail the nature of what I call their ramped up "revenue buying" programs.

The fact of the matter is that Amazon is one big ponzi scheme and as long as they can continue growing revenues, even at the expense of reporting declining operating income and cash flow, and as long as the stock market keeps inflating the AMZN bubble, then this scheme will continue. But believe me, the fact that their revenues are still growing at double digits AND their operating income is plummeting by double digits, tells me that they are getting a lot more desperate and aggressive at "buying" revenues.

Eventually this will come to an unhappy ending for everyone except the CEO Jeff Bezos, who sells millions of shares every quarter.

I would too if I were him.

In the meantime, I often buy from Amazon because it is convenient and, if they want to subsidized the cost of getting a product to my house, it is a lot cheaper in terms of what I pay plus the time involved and I love a "free lunch."

The bottom line for me is that I know that if I had time I could show you how Amazon likely loses money every quarter on a net income basis. I focus on operating income and cash flow because those are the numbers AMZN highlights in its press release. This harkens back to the tech bubble days when "pro forma" accounting was inserted in the financial media in place of true GAAP accounting. Now all tech companies use "pro forma" accounting and the stock market is conditioned to use it too. But even the operating income numbers they report are manipulated and dirty.

If anyone is interested, the footnotes in the last 10K will give you the keys to backing into somewhat real numbers. But we would need to see the inside books to see the golden truth.

www.lemetropolecafe.com

Thu, 04/28/2011 - 18:20 | 1218192 A Man without Q...
A Man without Qualities's picture

Very good analysis. Amazon share price is one of the most blatant examples of the desperate attempt to reflate the bubble. We've had a never ending series of bubbles for more than 12 years, and we've seen what happens every single time.

But high stock prices are a benefit of QE, high commodity prices are due to things happening in emerging markets somewhere, so don't forget it.

Thu, 04/28/2011 - 16:43 | 1217661 razorthin
razorthin's picture

Labor cost increasing?  Time to move manufacturing to the States.  We've killed our unions and the workforce is ripe for a repeat of pre-IR slave labor.

Thu, 04/28/2011 - 16:45 | 1217667 Quantum Nucleonics
Quantum Nucleonics's picture

RIMM is the next Palm.  Which second tier tech company will overspend on RIMM's carcass a year or two from now?  HP acquisition team, please get working on your bid.

Thu, 04/28/2011 - 16:47 | 1217688 Josh Randall
Josh Randall's picture

Wasn't RIMM's CEO the one that bit the head off a bat in an interview last week and then stormed off the stage, p!ssing on the Alamo on the way home ?

Thu, 04/28/2011 - 16:56 | 1217760 John Law Lives
John Law Lives's picture

Considering how things go in the FUBAR bizarro world, RIMM stock will probably surge higher tomorrow the way AMZN did after its EPS miss.

Thu, 04/28/2011 - 17:02 | 1217819 masterwoo
masterwoo's picture

If people use HTC, they would know HTC are even better than iPhone...

I don't know why people are still using those blackberry, maybe because those corporate policy

Thu, 04/28/2011 - 17:03 | 1217824 Ethics Gradient
Ethics Gradient's picture

From a corporate perspective, Blackberrys have a lot going for them.

BES provides a decent amount of control and the devices are pretty good at messaging (which is what they're all about). They look the part too. Shame the doc. is crap, the data plans are overly complicated and all aspects that I've had the displeasure to be exposed to are prone to instability.

They're not much fun from a casual user perspective either. They will live or die by their take up in the business world.

So here's the rub. Will there be a product that integrates with business servers and provides boors the ability to Twatter whilst having a crap?

From that perspective, I think there's legs in the M$/Nokia marriage - if Steve Ballmer doesn't cock it up.

Thu, 04/28/2011 - 17:12 | 1217865 Cdad
Cdad's picture

Sometimes, when I am not bleeding from my ears for listening to the BlowHorn [CNBC], there is reward.  Learning tonight that P. Najarian bought MSFT today, and he owns RIMM.

I'm wondering, how does being a half-assed former special teams player make a guy qualified to analyze companies?  

Giddee up there, nano second Pete.

Thu, 04/28/2011 - 17:55 | 1218095 virgilcaine
virgilcaine's picture

Will the Canadian Ceo walk out on another interview?  Mkt share?, security concern?   let me out of here..

Thu, 04/28/2011 - 18:06 | 1218144 Atomizer
Atomizer's picture

 

 

Typing this from my Blackberry Playbook.

http://crackberry.com/press-release-research-motion-provides-updated-q1-...

At the close of the markets today RIM fired off a press release letting investors know they've adjusted their forecasted revenue down from the guidance provided last quarter. The drop is due to less phone sales than expected, with a bigger portion of the sales mix coming from lower end phones than expected. The press release is below to read, but if you're by the computer at 5:30pm EDT you can jump on the live webcast to hear RIM talk about the numbers .  

 

 

Thu, 04/28/2011 - 18:23 | 1218195 disabledvet
disabledvet's picture

Apple's first victim.  "Sorry 'bout that."  Is that Oracle breathing down Mr. Softie's neck?

Thu, 04/28/2011 - 19:08 | 1218313 max2205
max2205's picture

Hockey stick = DECK love this bs Q1 eps blowout ( oops move forward shipments from q2) $0.49 Est q2 loss of $0.25. Wtf opps! So 1st half of ~$.28 wait for it..... Full year est guides at huh $5.00 So tell me why Deck is only down 10%?!?! The people of Enron are wishing they reported like this

Thu, 04/28/2011 - 20:46 | 1218480 Leo Kolivakis
Leo Kolivakis's picture

RIMM will come roaring back. In the meantime, enjoy some SunPower, up 38% AH:

http://finance.yahoo.com/q?s=spwra&ql=1

 

Solar shorts are the biggest dummies on earth! LOL!

Fri, 04/29/2011 - 01:58 | 1219351 palmereldritch
palmereldritch's picture

This story is like a Blythe thread, just replace physical silver with RIMM

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